Q: My patience with what appears to be a much loved KXS is now pretty much stretched.
I am told their business is on a solid footing and they are fundamentally doing well? So, is there a reason it has been sitting on the sidelines during this broad rally?
I am told their business is on a solid footing and they are fundamentally doing well? So, is there a reason it has been sitting on the sidelines during this broad rally?
5i Research Answer:
We have comments posted on KXS, but largely its price has been moving sideways and not participating in the broader rally as its high P/E is still coming down to reasonable levels while the underlying business continues to grow.
This sideways action usually means investors are not fully willing to sell it off yet as the business is still growing, but a bid up in its price would cause its multiple to expand to levels not congruent with other Canadian tech names. In this case, time is needed while the company's fundamentals 'grow into its multiples', and eventually it can break out of this range.